The Gurgaon administration has proposed to slash circle rates of properties by 15% this year to help revive the sluggish real estate market, reports Bagish Jha. If the Haryana government approves the proposal, it will be the first time in recent history that Gurgaon, a premium real estate market, will see the circle rate graph slip downward. In the previous two financial years — 2014-15 and 2015-16 — circle rates in the city were kept unchanged but that failed to lift buyer sentiment.

Though it's not the only factor responsible for the realty industry's current problems, a senior government official said the proposal to cut circle rates is a course correction, in consonance with the prevailing ground realities, and is expected to help recharge the market.

"It (the proposal) reflects the reality," said divisional commissioner D Suresh, who has sent the proposal to Chandigarh for approval. Suresh said in some areas, existing circle rates are higher than current market rates of land and need to be rationalised. Circle rate is the minimum value at which sale or transfer of a plot, a built-up house, an apartment or a commercial property take place. Buyers also pay stamp duty according to the circle rate.

Gurgaon deputy commissioner TL Satyaprakash, who led the committee that proposed the reduction, said there was a dip in flat registries, leading to loss of revenue for the government. "Market rates have come done in certain areas but circle rates are still high, so we have to rationalise the rates," said Satyaprakash